Methods to Evaluate Agglomeration Effects in Transport System appraisal Frameworks

Taina Haapamäki, Antti Kauhanen (), Seppo Laakso, Heikki Metsäranta, Marianna Ojanperä, Krista Riukula and Touko Väänänen

No 101, ETLA Reports from The Research Institute of the Finnish Economy

Abstract: Abstract The spatial concentration of production and population to urban areas is an important theme in societal discussion. The spatial concentration of economic activity is called agglomeration in urban economics. The economic impact of agglomeration is seen in the productivity of firms. Understanding agglomeration and its impacts is important from the point of view of transport, business and urbanization policies. This report lays out a theoretical framework that can be used to analyze the impacts of agglomeration and examine how the improvements of the transport system affects agglomeration. The recent empirical literature on the impact of the transport system on agglomeration is reviewed and the challenges of this literature are discussed. The focus is especially on how the impact of changes in the transport system on agglomeration can be analyzed in a reliable way. The main threats to reliable analysis are double counting of benefits and poor research designs leading to too large estimates of the elasticity between accessibility and productivity. The report provides recommendations on how the transport appraisal frameworks should be developed to capture agglomeration effects, and highlights the need for Finnish research on this subject.

Keywords: Transport system; Agglomeration; Wider economic impacts (search for similar items in EconPapers)
JEL-codes: H43 H54 R42 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2020-05-06
New Economics Papers: this item is included in nep-gen, nep-tre and nep-ure
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